T-Mobile today announced "Jump on Demand," a new plan that lets subscribers upgrade their phones up to three times a year on 18-month payment schedules.

"Our customers upgrade significantly faster than the industry overall," said Matt Staneff, T-Mobile's SVP of customer loyalty. "What's going on is this concept of on-demand. Things now happen on demand, in real time, whenever you want it."

The plan is an enhancement to the existing Jump early-upgrade system, which now includes more than 10 million of T-Mobile's approximately 57 million customers. T-Mobile is increasing the upgrade frequency and removing the $10 supplementary monthly fee, although it's introducing an optional $8 monthly fee for handset insurance.

All of the major carriers have early upgrade plans, but T-Mobile has the best terms. Verizon requires you to pay off the full value of your phone. Sprint allows one upgrade every 12 months with a $10 monthly charge. AT&T has several plans, but the one with the most upgrades lets you upgrade once annually after paying off 60 percent of your phone's price. In all cases, you must turn your phone in to your carrier to be refurbished and resold.

T-Mobile's plan will create a new stream of used and refurbished phones into its inventory, which the carrier will either use for warranty replacements or sell to users at a discount, Staneff said. So T-Mobile will have a wider range of lower-priced, slightly older refurb phones available for people who can't afford a brand new phone. Many of those will probably find their way to MetroPCS. So far, so good.

T-Mobile Gets Stickier Jump on Demand isn't just good for customers, it's good for T-Mobile. While the company doesn't have two-year service contracts binding its subscribers, the device contracts can play a similar role. Letting people upgrade more quickly keeps their device balances high, which makes it more difficult to leave the carrier. (Anyone can leave if they pay off their device balance.)

Let's say you get a new $500 smartphone every four months. Jump has an 18-payment structure, so you'll pretty much always have at least 14 payments remaining. If you want to quit T-Mobile, you have to pay off the 14 payments and return your phone. Those 14 payments function as a form of early termination fee, even though I'm probably about to get an angry phone call from T-Mobile in about 15 minutes for claiming they have anything like an early termination fee.

The losers here—other than the other carriers—are companies like Huawei, OnePlus, Alcatel, and ZTE (with its new Axon Phone), which are trying to push affordable, unlocked phones where you have to pay the full price up front. The Alcatel One Touch Idol 3 for $299 is an amazing value, but it's going to have to compete with big posters saying "iPhone 6 for $15/month!" (Huawei noted that it's running its own payment plans, but it still advertises its phones on gethuawei.com primarily with the full up-front price.)

"Generally, and especially on the high-end phones, consumers like the flexibility of paying for their phone over time," Staneff said. "The minority of the higher end phones are consumers who pay full price upfront. As the price of the phone gets lower, that percentage definitely goes up."

With an upgrade to each new iPhone every 12-13 months, that's basically $195 per iPhone as long as you stay within T-Mobile's warm embrace. Do you want an "affordable premium" device for $299, or a world-leading flagship for $195? That's the math that will make unlocked device builders cringe.

Related

This is just the first of several "amped" moves, which will upgrade T-Mobile's previous "unCarrier" steps this summer, T-Mobile spokeswoman Alex Schwerin said. Other features that may be "amped" include phone payment plans, unlimited data plans, global roaming, Wi-Fi calling and texting, fast LTE service, rollover "data stash," unlimited music streaming, paying off other carriers' termination fees, and business plans.

"We're amping several of them, and yes, every amp will be a previous unCarrier move," she said.

About the Author

PCMag.com's lead mobile analyst, Sascha Segan, has reviewed hundreds of smartphones, tablets and other gadgets in more than 13 years with PCMag. He's the head of our Fastest Mobile Networks project, hosts our One Cool Thing daily Web show, and writes opinions on tech and society.
Segan is also a multiple award-winning travel writer. Other than ... See Full Bio

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